Opinion

Serbia: deja vu no more

History repeats itself in the Balkans. Right? The cliche has just been proved wrong again. Last Sunday (19 May) we witnessed a contest pitting the incumbent Boris Tadic, seen as the EU's best bet, against Tomislav Nikolic, a populist of impeccable nationalist pedigree.

This is a similar situation to both 2004 and 2008, only that this time around the populist won. The outcome is a good opportunity to get over the familiar narrative where the forces of good are in eternal struggle with the forces of darkness, and Brussels comes to the rescue in the 11th hour.

In comparison to 2004 and 2008 the Serbian political landscape is far more complex. Nikolic may have to cohabitate with a government composed of Tadic's Democrat Party (DS), and the Socialist Party of Serbia (SPS, once presided over by Slobodan Milosevic), along with smaller groups.

What is more, the SPS leader Ivica Dacic (Milosevic's spokesperson in the 1990s) might even be in charge. After his party won 15 percent in the parliamentary vote on 6 May, the SPS leader noted that: "Perhaps it is not known who will be Serbia's president, but it is known full well who will be prime minister."

So now the pro-EU coalition, cobbled together back in 2008, if it were to be revamped, has to share power with a former paramilitary. It would be uncomfortable, but not the end of the world.

For one, nationalist posturing is present across the whole political spectrum in Serbia. A protege of Tadic, foreign minister Vuk Jeremic, has long outdone the opposition in waving the flag over the Kosovo issue. And what about Dacic's electioneering stunt to arrest a Kosovar unionist to show who is the toughest of them all?

Nikolic, by contrast, has not played up the issue. Instead he campaigned on corruption and economic troubles, and even visited an Albanian-majority area in the south to talk about coexistence. He also says Serbia should do its utmost to join the EU in the next decade and reap maximum benefits from accession. Nikolic's political message specifically draws a distinction with europhobes such as Vojislav Kostunica or his own ex-boss Vojislav Seselj.

Talk is cheap. Nikolic's Serbian Progressive Party (SNS) has yet to prove that it could emulate the example of the Croatian Democratic Union (HDZ), a nationalist party that managed the shift to the centre-right and European respectability.

The international community seems disinclined to give Nikolic the benefit of the doubt just yet. But the SNS is facing what might be called the political Islamists' dilemma: until it finds itself in real power it has little incentive to back up its words with action and demonstrate that it really is on the path to moderation.

As all main players now favour the EU, it is only natural that Serbian political life focuses on issues such as jobs, welfare, development and high-level corruption. Like the rest of the Western Balkans, Serbia is in poor shape economically.

The year 2011 was the first year of growth since the onset of the global financial crisis three years before, although the 1.9 percent growth in Serbia's GDP was well below the 5.4 percent average enjoyed between 2000 and 2008.

Economic factor

More than 22 percent of the workforce is unemployed, and there are worrying parallels with the EU's southern countries. It suffers from a combination of fiscal and balance-of-payments deficits, a large debt (45.1 percent of GDP), anaemic growth and alack of competitiveness.

Nikolic has undoubtedly been boosted by the disaffection that this economic gloom has caused.

DS failed to explain to voters that it is still a force for good. Corruption scandals and pork-barrel politics have tainted its reputation. Serbia's good rapport with the IMF and progress with attracting foreign investors (including landmark projects by companies such as Fiat and Benetton) is not convincing those who see themselves as losers in the transition to a market economy.

The trouble is that President Nikolic will have few constitutional levers with which to deliver on his promise to alter the situation. Tadic's exit from power effectively means the end of the imperial presidency, wielding a great deal of informal power beyond what Serbia's basic law mandates.

So what can the EU do in this more complex Serbia? Brussels will inevitably adopt a wait-and-see approach to Nikolic. Dust will have to settle before we find out who in Belgrade takes the lead, formally or informally, in the "technical talks" with Kosovo.

Nationalist credentials

In the positive scenario, a leader with spotless patriotic credentials, bargains hard but also delivers on compromises without fear of being called a traitor. In a negative scenario, the president and the government pass the buck or play good-cop/bad-cop and effectively block the normalisation process.

A question hovers over the future prime minister who is likely to be, thanks to Nikolic's election, a much more powerful figure than in the past.

Is Dacic a competent economic manager? It is one thing to head the interior ministry (as he did in 2008-11), and quite another to steer Serbia through the current economic storm.

The first review of the stand-by agreement with the International Monetary Fund (IMF) approved in September 2011 is due soon, and this would present Dacic with the challenge of taking the IMF prescription of getting hold of public debt and reining in a fiscal deficit, which is currently at 4.1 percent. This would be a bitter pill for his core support of pensioners and rural dwellers to swallow. At the end of the day, a prime minister from DS might be a better idea if one of the party's heavyweights decides to step into the ring.

Rebalancing the economy and implementing structural reforms to spur growth may turn out to be far more challenging than pleasing Brussels or handling Kosovo. It is perhaps a sign of the gradual normalisation of Serbia that its core concerns now mirror those of much of the rest of Europe.

The writer is an analyst at the London-based European Council on Foreign Relations